Budget, Sequestration, & the Economy. On Wednesday, the Commerce Department released a report showing that new home sales increased by 5.7 percent from August to September, the largest jump since April 2010. On Friday, the Department reported that U.S. Gross Domestic Product grew by a stronger-than-expected two percent for the third quarter of 2012. A day earlier, more than 80 executives from large U.S. companies called on Congress and the White House to reach an agreement on deficit reduction and tax policies after the election. The executives stated their support for a tax code overhaul that would include revenue increases, and they blamed sluggish economic growth and hiring delays on the looming threat of the fiscal cliff. A report released Friday by the National Association of Manufacturers predicted almost 12% U.S. unemployment in 2013 if Congress and the Administration fail to avoid the fiscal cliff.

2012 Elections. On Monday night, President Obama and Republican presidential nominee Mitt Romney participated in the third and final presidential debate in Boca Raton, Florida. While the debate focused on foreign policy, the candidates also used the opportunity to make statements about domestic issues like sequestration and deficit reduction. According to most political pundits and instant polling, President Obama scored his second straight modest debate win. However, the majority of national polling now shows Governor Romney slightly ahead of the President. Governor Romney’s rise in the polls also appears to have helped Republicans’ already strong chances of maintaining control of the House of Representatives. On the other hand, President Obama maintains a slight lead in most polls of the heavily contested states that are crucial to an Electoral College majority. In addition, the majority of recent polling suggests the chance of continued Democratic control of the Senate is solidifying. On Tuesday, Richard Mourdock, the Republican nominee in the close Senate contest in Indiana, condemned rape but called any resulting pregnancy “something that God intended.” Mourdock’s Democratic opponent, Congressman Joe Donnelly, called the comments “insulting and wrong to women….” On Wednesday, the Obama campaign released 3.5 million copies of a new blueprint for the President’s vision for a second term in office. The campaign primarily will distribute the blueprint in battleground election states. President Obama also promised Tuesday to pass major immigration reform next year if he is reelected. A poll released the following day showed that approximately 74 percent of Latino voters support the President over Governor Romney, which could be a major factor in swing states with sizeable percentages of Hispanic voters, including Colorado, Florida, Iowa, Nevada, North Carolina, and Virginia.

All Members of the Senate Health, Education, Labor and Pensions (HELP) Committee, with the exception of Senator Rand Paul (R-Kentucky), signed a letter Thursday to the Massachusetts pharmaceutical board and the company that produced the reportedly contaminated steroid linked to the meningitis outbreak. The Senators seek background information on the company, how the drugs became contaminated, and state regulatory procedures. While more than 300 people have been injured and 24 killed, the Centers for Disease Control announced Thursday that most of the remaining exposed people have moved beyond the high-risk period. This week, leaders of the HELP Committee and the House Energy and Commerce Committee released a draft bipartisan bill to set standards for tracking prescription drugs throughout the supply chain.

Former Senator George McGovern (D-South Dakota), the Democratic nominee for President in 1972, died Sunday at the age of 90. Vice President Biden attended the Senator’s memorial service Thursday to pay tribute to the man he said gave him the “courage” to enter politics through his strong advocacy against the Vietnam War. House Oversight and Government Reform Committee Chairman Darrell Issa (R-California) subpoenaed the Obama Administration Monday for documents and communications related to a Medicare Advantage pilot program initiated by the Department of Health and Human Services (HHS), after he deemed unresponsive the documents previously provided by HHS. House Ways and Means Committee Chairman Dave Camp (R-Michigan) and Oversight Subcommittee Chairman Charles Boustany (R-Louisiana) sent a letter to HHS Secretary Kathleen Sebelius Wednesday demanding information about the alleged use of taxpayer dollars to promote President Obama’s healthcare overhaul.

On Wednesday, House Majority Leader Eric Cantor (R-Virginia) released a report on President Obama’s legislative agenda entitled “The Imperial Presidency.” The report alleges that President Obama has shown a disregard for separation of powers. The White House dismissed the report, arguing that House Republicans have blocked several of President Obama’s key legislative proposals. Although Majority Leader Harry Reid (D-Nevada) has announced plans to bring cybersecurity legislation to the Senate floor during the lame-duck legislative session, Senate Homeland Security and Government Affairs Committee Chairman Joe Lieberman (I-Connecticut) said Wednesday the bill he drafted with Ranking Member Susan Collins (R-Maine) is “less than 50/50” to pass at that point, in light of opposition from most Republicans and some in the private sector. Homeland Security Secretary Janet Napolitano indicated this week that an Executive Order setting up a cybersecurity framework is not a foregone conclusion.

FOREIGN POLICY MATTERS

The September 11 attack on the U.S. Consulate in Benghazi, Libya, remained a topic in the foreign policy-oriented final presidential debate, but less directly than in the prior town hall format. Governor Romney emphasized the “tumult” in Syria, Iran, Libya, northern Mali and Egypt in citing examples of his view of “an American policy in the Middle East that is unraveling.” Romney also stated he would pursue “a pathway to get the Muslim world to be able to reject extremism.” President Obama stated his “first job as Commander-in-Chief…is to keep the American people safe.” He cited examples of his Administration’s accomplishments: ending the war in Iraq, transitioning out of Afghanistan, guiding the U.S. role in the international coalition efforts for Libya, and refocusing attention on al Qaeda’s core leadership, which included the killing of Osama bin Laden. On Thursday, Senate Intelligence Committee Chair Dianne Feinstein (D-California) and Vice Chair Saxby Chambliss (R-Georgia) announced the Committee will hold a closed-door hearing on the Benghazi attack on November 15th. The Committee also has plans for subsequent hearings on the attack.

With respect to the Department of Defense’s budget at the Monday debate, Governor Romney committed to “not cut our military budget by a trillion dollars, which is the combination of the budget cuts the President has, as well as the sequestration cuts.” President Obama countered that Romney has proposed “…another $2 trillion on military spending that our military has not asked for.” The President added his view that sequestration was a Congressional proposition that “will not happen”. In response to Governor Romney’s allegation that the U.S. Navy is smaller now than any time since 1917, President Obama suggested capabilities are more important than size. Meanwhile, this week, Secretary of Defense Leon Panetta urged four agenda items for the Congressional lame-duck session to strengthen U.S. national security: (1) block sequestration from taking effect, (2) pass the National Defense Authorization Act, (3) pass cybersecurity legislation, and (4) confirm President Obama’s nominees to head the NATO and Afghanistan theater of operations. Tuesday, Senator Claire McCaskill (D-Missouri) and Senator Rob Portman (R-Ohio) wrote Army Secretary John McHugh to demand a probe into allegations of possible alcohol and drug abuse and fraud by U.S. contractors and Army officials while in Afghanistan.

Iran. Late Thursday, intelligence officials reported Iran is nearing the final installation of 3,000 centrifuges at the Fordo military site, putting Iran closer to being able to build a nuclear weapon. While the New York Times reported the United States and Iran had reached an agreement in principle Sunday to hold direct talks after the U.S. presidential election, President Obama denied the report but said in Monday’s debate he is open to such talks. Responding Thursday to allegations of infringement of free expression, the Iranian Government said, “Establishment of (a) cyber council for securing domestic Internet relates to security and sovereignty of states rather than an issue dealing with promotion and protection of human rights." Meanwhile, on the eve of Eid al-Adha, Iran’s Ayatollah Ali Khamenei blamed the United States and Israel for the 19-month civil war in Syria.

Syria. Despite U.N.-Arab League Special Envoy Lakhdar Brahimi’s efforts to produce a ceasefire over Eid al-Adha, just hours before the truce was scheduled to begin, the Syrian regime shelled Damascus. Also Thursday, Syrian activists reported rebel fighters pushed into predominantly Christian and Kurdish neighborhoods in northern Aleppo that had been held by pro-Assad forces. Early Friday, a car bomb detonated in Damascus, killing at least five people. While this week the Russian Foreign Ministry alleged U.S. coordination of the delivery of weapons to Syrian rebels, the State Department maintains the United States is only providing non-lethal assistance. In the debate, President Obama highlighted his Administration’s targeted assistance to the Syrian opposition. Governor Romney said the United States “should be playing the leadership role” in Syria, and the opposition must “have the arms necessary to defend themselves”.

On Monday, Secretary of State Hillary Clinton traveled to northern Haiti to participate in the formal opening of the Caracol Industrial Park. On Wednesday, the Secretary held a bilateral meeting in Washington with Brazilian Foreign Minister Antonio de Aguiar Patriota, who was in town for the fourth meeting of the Global Partnership Dialogue. Secretary Clinton thanked the Minister for Brazil’s contributions to Haiti. Also Wednesday, the State Department announced the Secretary will travel next week to Algeria, Bosnia and Herzegovina, Serbia, Kosovo, Albania, and Croatia. On Thursday, the State Department expressed concern about reports this week of increasing ethnic and sectarian violence in Burma’s Rakhine state, urging all parties to halt all attacks.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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